Property Management and Delinquent Rents

A significant indicator of a property manager’s success is their effectiveness in controlling overdue rents. A well-run property should not have routinely delinquent tenants. However, when delinquency does occur, immediate action must be taken. A list of all delinquent rents should be prepared showing all tenants who have not paid or have partially paid rents and other monies due. In addition, a delinquency report recording the method and date of all collection attempts should be prepared.

When giving notice to a tenant to remedy the delinquency does not help, the property manager should review the lease’s termination rights and consider possible legal action against them. Should a delinquent tenant suddenly vacate the premises, late charges and legal fees should be deducted from their security deposit.

Finally, if repeated notices and personal visits by the property manager fail to get the tenant to offer a solution to the delinquency, the manager should contact legal counsel, research relevant state and local laws and prepare to file eviction proceedings for nonpayment of rent.

To begin legal action, the property manager should review the delinquency report each month outlining all telephone calls, property manager visits, notices and other actions taken in an effort to collect the rent. This report along with the tenant ledger will help determine what legal action, if any, should be taken against delinquent tenants.

Tenants who usually pay rent on time should be granted an extended grace period in which to pay. In many cases, the initiation of legal action will induce habitual late payers to remit the rent owed. However, eviction procedures should begin immediately for tenants who are suspected of moving, as well as for those who continue to refuse to pay. Copies of the tenant’s lease and the tenant ledger should be forwarded to the attorney who can then begin legal action.

If you have any questions or need help with a tenant or collection of delinquent rents, contact us at Metro East Commercial Real Estate. Our commercial property management team has the knowledge and expertise to manage your property effectively and efficiently, and we will work with you to create a management plan to help care for your investment as if it were our own.

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